Accurate Tax Returns budgets two direct labor hours for every tax return that it prepares, at a standard cost of $34 an hour. During the most recent year, 540 returns were completed with the labor cost totaling $26,000. The actual labor cost was $48.15 per hour during that period. The actual number of labor hours was 1,000. What is the direct labor cost variance? (Round any intermediate calculations to the nearest cent, and your final answer to the nearest dollar.)
A) $7640 F
B) $34,000 U
C) $14,150 U
D) $34,000 F

Question

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DeniceSandidge DeniceSandidge · Answer 1 · 2019-10-16T08:57:50+02:00

Answer:

direct labor cost variance = 14150 U

correct option is C) $14,150 U

Explanation:

given data

labor hours LH = 1,000

actual labor cost AL = $48.15 per hour

standard cost SC = $34 an hour

labor cost totaling = $26,000

to find out

direct labor cost variance

solution

we will apply here equation for direct labor cost variance that is

direct labor cost variance = LH × ( AL - SC) ..............1

here LH is labor hours and AL is actual labor cost and SC is standard cost so put all these in equation 1

we get

direct labor cost variance = 1000 × ( 48.15 - 34 )

direct labor cost variance = 14150 U

correct option is C) $14,150 U